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The incumbent’s preference for imperfect commitment

Author

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  • Matthias Wrede

    (Friedrich-Alexander University Erlangen-Nürnberg (FAU)
    CESifo)

Abstract

Using a model with forward-looking voting strategies, we examine the tax policies of public officials who maximize the weighted average of rents and benefits to their specific electoral clienteles when commitment is possible. We assume that the degree of commitment to a tax policy can be varied through its design and institutional anchoring. At the center of the analysis lies the question of the extent to which public officials restrict the policy space of future governments. On the one hand, stronger restrictions make it more difficult for political opponents to enact unwanted policy changes, but, on the other hand, they also reduce the likelihood of reelection. We show that incumbents prefer perfect commitment to the absence of any commitment and that, from the point of view of an incumbent, imperfect commitment can be superior to perfect commitment. Imperfect commitment allows incumbents to raise their reelection chances either by binding themselves and causing the opponent to deviate or binding the opponent and deviating themselves.

Suggested Citation

  • Matthias Wrede, 2019. "The incumbent’s preference for imperfect commitment," Public Choice, Springer, vol. 180(3), pages 285-300, September.
    • Handle: RePEc:kap:pubcho:v:180:y:2019:i:3:d:10.1007_s11127-018-00636-6
    DOI: 10.1007/s11127-018-00636-6
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    References listed on IDEAS

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    More about this item

    Keywords

    Rent seeking; Electoral competition; Imperfect commitment; Rules; Discretion;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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